Progress Report to the TNRC for Analysis of the Economics of Atrazine Remediation for Representative Grain Farms in the Aquilla Watershed, Hill County, Texas: Subtasks 4.0-4.4

Four alternative BMPs for atrazine remediation were reported by Harmon and Wang for the study area. The BMPs involved alternative incorporation practices, tillage operations, and sediment ponds. Harmon and Wang reported no statistical difference in corn yields under the alternative BMPs. An economic analysis of four alternative best management practices (BMPs) for atrazine remediation in Hill County, Texas, was performed by the Agricultural and Food Policy Center (AFPC) at Texas A&M University. Using the farm-level economic simulation model FLIPSIM, AFPC scientists analyzed the financial effects of the alternative BMPs on the Texas Blackland Prairie representative farm. This farm consists of 2,000 dryland acres, divided among corn (600 acres), sorghum (750 acres), wheat (250 acres), and native pasture (150 acres). This farm also maintains a small beef cowherd. Regularly updated, the AFPC maintains more than 80 farms across the nation that form the basis for probabilistic-based agricultural policy evaluation.Agricultural and Food Policy, Resource /Energy Economics and Policy,

DISTRIBUTION CHOICE UNDER NULL PRIORS AND SMALL SAMPLE SIZE

Defining appropriate probability distributions for the variables in an economic model is an important and often arduous task. This paper evaluates the performance of several common probability distributions under different distributional assumptions when sample sizes are small and there is limited information about the data.Research Methods/ Statistical Methods,

STOCHASTIC EFFICIENCY ANALYSIS USING MULTIPLE UTILITY FUNCTIONS

Evaluating the risk of a particular decision depends on the risk aversion of the decision maker related to the underlying utility function. The objective of this paper is to use stochastic efficiency with respect to a function (SERF) to compare the ranking of risky alternatives using alternative utility functional forms.Research Methods/ Statistical Methods,

Stochastic efficiency analysis with risk aversion bounds: a simplified approach

A method of stochastic dominance analysis with respect to a function (SDRF) is described and illustrated. The method, called stochastic efficiency with respect to a function (SERF), orders a set of risky alternatives in terms of certainty equivalents for a specified range of attitudes to risk. It can be applied for conforming utility functions with risk attitudes defined by corresponding ranges of absolute, relative or partial risk aversion coefficients. Unlike conventional SDRF, SERF involves comparing each alternative with all the other alternatives simultaneously, not pairwise, and hence can produce a smaller efficient set than that found by simple pairwise SDRF over the same range of risk attitudes. Moreover, the method can be implemented in a simple spreadsheet with no special software needed.Risk and Uncertainty,

Stochastic Optimization: An Application to Sub-Arctic Dairy Farming

The paper demonstrates how a deterministic farm linear programming (LP) model can be made stochastic and simulated using Solver and Simetar© in Excel©. The demonstration is conducted with an LP-model for a dairy farm for a sub arctic region of Norway. The income risks arising from variation in milk and crop yields due to winter damage in leys and pastures have been quantified for farms demonstrating low, medium and high forage yield risk. The estimated distribution of farm profit will be skewed to the left, indicating a downside risk. In the presence of risks, farmers maximize income by producing the milk quota with using surplus forage for meat production. The analysis demonstrated here may assist farmers and farm managers in improving sensitivity analysis for risky variables in farm LP models.dairy production, Northern Norway, stochastic optimization, stochastic simulation, yield risks, Livestock Production/Industries,

Comparison of Alternative Safety Net Programs for the 2000 Farm Bill

As Congress begins its debate for the 2002 farm bill, there have been calls for a counter cyclical safety net that will provide a better basis for targeting longer term planning than exists with ad hoc emergency assistance. Further subsidization of the multi-peril crop insurance (MPCI) program has been proposed, as well as reliance on a farm and ranch risk management (FARRM) account to help farmers. A whole farm revenue income support program and several variations of national income supplement programs have been put forward. A comprehensive analysis of different safety net alternatives using a common methodology is needed so farmers and policy makers can make objective comparisons. The objective of this paper is to quantitatively analyze the economic effects of alternative safety net/insurance programs on farmers in the Southern United States. The objective is accomplished by simulating representative crop farms in the South over the 2001-2005 planning horizon for alternative safety net options. The simulated net present value distributions for the farms are compared using certainty equivalents to determine the value of alternative safety net options to feed grain, cotton and rice farms in the South.Agricultural and Food Policy,

Comparison of Risk Between Cropping Systems in Eastern Norway

The aim of this study was to compare production and policy risk of organic, integrated and conventional cropping systems in Norway. Experimental cropping system data (1991-1999) from eastern Norway were combined with budgeted data. Empirical distributions of total farm income for different cropping systems were estimated with a simulation model that uses a multivariate kernel density function to smooth the limited experimental data. Stochastic efficiency with respect to a function (SERF) was used to rank the cropping systems for farmers with various risk aversion levels. The results show that the organic system had the greatest net farm income variability, but the existing payment system and organic price premiums makes it the most economically viable alternative.organic, integrated and conventional crop farming, stochastic simulation, multivariate kernel estimator, risk aversion, stochastic efficiency with respect to a function, Crop Production/Industries, Risk and Uncertainty, Q12, C44,

AN INTERACTIVE ILLUSTRATION OF FARM PROGRAM PROVISIONS

Explaining the details and the impacts of government program provisions to agricultural producers can be a challenge for extension educators. This paper introduces a visual interactive tool that demonstrates the calculations of government payments established in the 2002 farm bill. Additionally, the paper explains how the tool is created in Microsoft® Excel and may be used in other areas.Agricultural and Food Policy,

Representative Farms Economic Outlook for the November 2002 FAPRI/AFPC Baseline

The farm level economic impacts of the Farm Security and Rural Investment Act of 2002 on representative crop and livestock operations are projected in this report. The analysis was conducted over the 2001-2007 planning horizon using FLIPSIM, AFPC’s whole farm simulation model. Data to simulate farming operations in the nation’s major production regions came from two sources: - Producer panel cooperation to develop economic information to describe and simulate representative crop, livestock, and dairy farms. - Projected prices, policy variables, and input inflation rates from the Food and Agricultural Policy Research Institute (FAPRI) November 2002 Baseline. The FLIPSIM policy simulation model incorporates the historical risk faced by farmers for prices and production. This report presents the results of the November 2002 Baseline in a risk context using selected simulated probabilities and ranges for annual net cash farm income values. The probability of a farm experiencing annual cash flow deficits and the probability of a farm losing real net worth are included as indicators of the cash flow and equity risks facing farms through the year 2007.Agribusiness, Agricultural and Food Policy, Crop Production/Industries,

Preliminary - Representative Farm Analysis of House of Representatives Draft Concept Paper for 2002 Farm Bill

Agricultural and Food Policy,